Pakistan Information & News

The Islamic Development Bank is aiming at a USD 271 million offer of Islamic bonds for the first time in Malaysian currency, the Ringgit. The bank is a Saudi Arabian organization set up by 56 nations to lend to Muslim communities. The Islamic Development Bank says that the proceeds from this debt offering could be swapped later into another currency. As part of a plan to raise USD 1 billion over five years to expand lending, the bank last year sold USD 500 million through bonds.
According to the bank’s director of treasury, the bank is keenly exploring the possibility of financing local-currency long-term projects. But if it can’t find Ringgit projects to deploy all the money, then the rest of the money can be swapped into dollars or other currencies. He also said that Malaysia’s domestic market is quite deep as it has a large number of institutional investors like pension funds and insurance companies who buy quality assets. There is growing popularity of Islamic debt among the world’s 1.5 billion Muslim population, and bond issuers like Islamic Development Bank are taking advantage of this.
The Indonesian government may also issue Islamic bonds for the first time, around next February. However, the decision has to be made on the currency for Islamic bonds, commonly referred to as ‘Sukuk’. The reason why Indonesia is raising more money through bond sales this year is to cover a wider-than-expected deficit in its budget. The Sukuk that Malaysia has helped popularize, is in great demand globally as more and more issuers opt to issue the paper to fund their projects.

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